Uncovering the cause of a deduction isn’t always an easy task. Many deductions are lumped in with other charges, and it can take some serious digging to untangle what exactly is being billed. For Nathan Helms, Director of TMS for the food brand Organic Valley, the time-consuming job of addressing these hidden deductions is all too familiar.
“There may be an ASN issue that is rolled into an on-time compliance issue,” Helms explains. “It really comes down to ferreting that out, and trying to fix the problem. What is the root cause of the problem, and how do I fix it?”
The accumulation of blanket deductions on an invoice can be like a shell game, with receivers discreetly passing off questionable charges. This can lead to countless hours wasted on picking apart the various reason codes to uncover the underlying issue behind a deduction. Administrative fees can also be part of the bargain when deductions mount, regardless of the legitimacy of the initial charge.
Which types of deductions are fair, and which go to far? Watch the latest episode of the Stay In Your Lance Podcast to learn more.
As with many issues surrounding deductions, detailed tracking and documentation can offer clarity. Both shippers and receivers can benefit from this added transparency. If a charge seems dubious to the shipper, the receiver will have the paperwork to back the legitimacy of the deduction. If the deduction can’t be accounted for in the record, shippers can quickly dispute the charge and move on. Still, getting stakeholders to understand the value of real-time tracking can be a challenge.
Matt Elenjickal, Founder and CEO of the tracking software company FourKites, sometimes faces hesitation from companies who may truly benefit from the FourKites product. Some may have concerns about how their data might be used. Others are reluctant to give up the profits they gain from charging deductions, a revenue source that detailed tracking would stand to eliminate.
“What is the outcome that a consignee is trying to get to? Is it to fine more, or to try and solve a problem?” Elenjickal asks. “It is a change in mindset, and that mindset shift has to happen to go from [deductions] as profit center to what is good for everyone: being more efficient.”
For fair, equitable, and efficient relationships to form in the transport space, shippers and receivers alike will have to get comfortable with sharing their data. Tracking platforms can facilitate the introduction, but it’s still up to each party to decide what level of access to data they wish to authorize. This requires a certain level of trust between a shipper and receiver, and those who can offer the highest levels of transparency will typically garner the best results.
How can you spot hidden deductions within an invoice? Watch the Stay In Your Lane Podcast for important insights into this problem.
Tracking software can be a great tool for reducing costs from deductions. On the other hand, could these systems be manipulated to drive the number of frivolous deductions even higher? Elenjickal thinks not.
“With our customer base, the data was never used to increase fines or penalties,” he explains. “It was always used for efficiency gains. Always.”
Real-time tracking with documentation can help introduce accountability and ease the burden of unfair deductions, but simple communication can go a long way toward addressing these issues. Cultivating fair and equitable relationships between shippers and receivers can help to keep deductions from getting out of hand in the first place. As with so many aspects of the transportation business, working to build partnerships based on trust and mutual understanding will lead to the best outcomes for everyone involved.